The figure given below depicts the demand and supply of Brazilian reals in the foreign exchange market.Assume that the market operates under a flexible exchange rate regime. Figure 22.1 In the figure: D 1 and D 2 : Demand for Brazilian reals S 1 and S 2 : Supply of Brazilian reals -Refer to Figure 22.1.Determine the equilibrium exchange rate and equilibrium quantity of Brazilian reals,if D₁ and S₁ are the relevant demand and supply curves for Brazilian reals in this market. A)10 pesos per real and a quantity of 150 reals B)6 pesos per real and a quantity of 250 reals C)8 pesos per real and a quantity of 150 reals D)8 pesos per real and a quantity of 250 reals E)6 pesos per real and a quantity of 200 reals

Question

Quizplus · Accepted Answer

The equilibrium exchange rate is where the demand and supply curves intersect. In this case, the intersection of D₁ and S₁ occurs at an exchange rate of 8 pesos per real and a quantity of 250 reals. Therefore, option D is the correct choice.

The Figure Given Below Depicts the Demand and Supply of Brazilian